Yes, there is a new OS coming out (OS X 10.4, code named tiger), Steve said it was going to be out Q1 (by the end of march). It does have some very cool new features, if you go to apples website, you can watch the keynote speech, ans Steve walks through some of the more appealing features... However i've heard that a lot of people aren't going to spend the money to upgrade to the newer OS because 10.3 is really great

You are not in danger of being outdated for a while yet. Tiger is due out in the first half of this year but you should be fine with Panther for a good while yet.

Highlights of Tiger:
1) Performance improvements - Tiger will likely be snappier and has some incremental performance boosts. Partly optimization, partly the effects of GCC4.
2) Spotlight - Fast searching of the system built into the OS and integrated with the core apps. Other people are more excited about this than I am. I'll stick to Quicksilver. It is useful though.
3) Dashboard - Mini programs to add simple functions to the OS. Similar to Konfabulator. They are very simple to write, lowering the threshold for simple control apps.
4) Automater - never used it. Can see the speil on Apple's site though.
5) XCode 2.0 - probably the most important new feature for me. XCode 2.0 has some nice features to make development easier.

In a nutshell you won't need to upgrade for quite a while yet unless you have a need to always be on the current release. There is no "must have" features being added but the improvements and features being added are nice.

I am guessing a release at WWDC if not before. It has been hinted that Tiger might get done early and there is the beta of MS Longhorn due in June to keep in mind. Steve Jobs hates to have his thunder stolen, so I would expect a release early enough for Tiger to get some solid press coverage before the Longhorn beta is out.

That is what I was thinking. The question I have is which makes more sense marketing wise. Have it out mid May so the developers would want to get it before arriving at WWDC? Or wait and release it to fanfare at WWDC itself.

If Tiger does not make it out by the week after WWDC then I would bet something went seriously wrong. Of course the end of WWDC only leaves 3 weeks before Q3 so that does not say much.